Local Government Units Funding Quiz

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Questions and Answers

Which of the following is classified under service income for local government units (LGUs)?

Salary from government employment

Lease Income

Investment Returns

Permit Fees (correct)

What are transfers in the context of funding for local government units (LGUs)?

Funds allocated for profit projects

General operational funding support

Funds provided for specific purposes (correct)

Unconditional funds for any purpose

Which of the following is categorized as business income for local government units (LGUs)?

Transfers from General Fund

Permit Fees

Subsidy from National Government

Fines and Penalties - Business Income (correct)

Which type of funding refers to money received by local government units (LGUs) without a specific purpose?

Subsidies Signup and view all the answers

Which of the following includes fees and charges associated with inspections conducted by local government units (LGUs)?

Inspection Fees Signup and view all the answers

What is the minimum number of suppliers needed for a purchase amounting to P1,000?

3 suppliers Signup and view all the answers

Which document does the Property Inspector use to indicate the acceptance or rejection of delivered items?

Inspection and Acceptance Report (IAR) Signup and view all the answers

What does the Stock Card (SC) record?

Quantities of all receipts and issuances of inventory Signup and view all the answers

What action does the Accounting Division take after receiving the Inspection and Acceptance Report (IAR)?

They record the accepted deliveries in the books of accounts Signup and view all the answers

What document is prepared by the Property/Supply Division to request the issuance of items available in stock?

Requisition and Issue Slip (RIS) Signup and view all the answers

What is the purpose of the Report of Supplies and Materials Issued (RSMI)?

To update the Stock Card and assist in journalizing Signup and view all the answers

Which two divisions reconcile their records as an internal control?

Property/Supply Division and Accounting Division Signup and view all the answers

What is the main purpose of an allotment issued by the Local Chief Executive?

To allow departments to incur obligations within the appropriation. Signup and view all the answers

What must obligations be accompanied by to be considered valid?

A certificate signed by specific local government officials. Signup and view all the answers

What is the accounting entry for appropriations in the annual budget of a local government unit?

Debit to Appropriations – Annual Budget, Credit to Legislative Appropriations Signup and view all the answers

Which registry is NOT mentioned as one for maintaining appropriations?

Registry of Appropriations, Allotments and Obligations – Equipment Purchases Signup and view all the answers

Which document is issued to perform a comprehensive release for a department?

Local Budget Matrix (LBM). Signup and view all the answers

What is the accounting entry to take up the release of allotment?

Debit to Released Current Allotment and credit to Current Allotment. Signup and view all the answers

How should updates to the registries be managed?

Registries must be updated for every change or addition in appropriations. Signup and view all the answers

How are supplemental budgets recorded?

They are documented similarly to the annual budget using journal vouchers. Signup and view all the answers

What limits the amount recorded in the books for a local government unit?

Annual appropriations for various expenses. Signup and view all the answers

What is the significance of the Certification on Appropriations, Funds and Obligation of Allotment (CAFOA)?

It certifies the existence of an appropriation and verifies fund availability. Signup and view all the answers

What must be documented when a realignment of budget items occurs?

Changes are reflected in the Registry of Appropriations through an ordinance. Signup and view all the answers

What type of fund does the Local Disaster Risk Reduction Management Fund include?

Quick Response Fund Signup and view all the answers

Which of the following is NOT classified as an obligation?

Projected revenues expected in the next fiscal year. Signup and view all the answers

In case of a re-enacted budget, what is required for documentation?

The re-enacted budget should be recorded in the registries. Signup and view all the answers

What form is used to effect the release of reserve amounts?

Allotment Release Order (ARO). Signup and view all the answers

Which of these registries is specifically for tracking financial expenses?

Registry of Appropriations, Allotments and Obligations – Financial Expenses Signup and view all the answers

How are the amounts recorded in the General Journal upon receipt of an allotment release order?

As a debit to Released Current Allotment and a credit to Current Allotment. Signup and view all the answers

What is maintained in separate sets for current and continuing appropriations?

Registries Signup and view all the answers

Which obligation must be fulfilled specifically for Metro Manila Development Authority contributions?

5% contributions for LGUs in NCR. Signup and view all the answers

Which of the following is NOT a component of the Registry of Appropriations, Allotments and Obligations?

Grants and Subsidies Signup and view all the answers

What is included in the estimates of income for the fiscal year?

Estimates of revenues from both local and external sources Signup and view all the answers

Which of the following is NOT a local source of revenue?

Assistance and subsidy Signup and view all the answers

What is the purpose of a journal voucher prepared by the Accounting Office?

To record the estimates of income, revenues, and receipts Signup and view all the answers

What does the term 'appropriation' refer to in local government finance?

Authorization made by ordinance for payment from funds Signup and view all the answers

Which component is essential for disclosing the financial condition of the local government unit?

All essential facts regarding long-term obligations Signup and view all the answers

What should be recorded in the Registry of Estimates and Actual Income, Revenues and Receipts (REAIRR)?

The details of estimates of income, revenues, and receipts Signup and view all the answers

Which of the following does NOT fall under external sources of revenue?

Receipts from Non-Tax Revenues Signup and view all the answers

What type of obligations must the budget include details about?

Bonded and other long-term obligations Signup and view all the answers

What does the 'credit' to the appropriate estimated income group accounts signify in the accounting process?

Increase in estimated income Signup and view all the answers

Study Notes

Introduction to Revenues and Receipts

Revenue is the gross inflow of economic benefits or service potential during a reporting period, resulting in an increase in equity, excluding contributions from owners.
Revenue includes only inflows received or receivable by the entity in its own account.
Receipts refer to actual cash collections from all sources during a reporting period.

Fundamental Principles for Revenue

All revenues of an entity are remitted to the National Treasury and included in the General Fund of the National Government, unless otherwise specified by law.
All moneys and property received by a public officer (in any capacity) are considered government funds and property, unless otherwise stated by law.
Amounts received in trust or from business-type activities of the government may be separately recorded and disbursed according to relevant rules.
Receipts are recorded as revenue for Special, Fiduciary, or Trust Funds (or other than the General Fund) only with authorization from law.
Collecting officers must issue official receipts (ORs) when collecting payments of any kind.
Temporary receipts are not used for public funds.
Pre-numbered official receipts (ORs) are used in strict numerical sequence.
Duplicate ORs must be exact copies of the original.
Government funds are not used for encashing private checks.
Receipts are acknowledged according to law, with a noted date of receipt with source and purpose.

Types of Funds

General Fund: used for any purpose not specified for other funds.
Special Fund: designated for particular purposes.
Trust Fund (Fiduciary Fund): held by a government agency or officer as a trustee, agent, or administrator for specific fulfillment.
Revenue Fund: includes all funds derived from government agency income, used for appropriation/expenditures as per law.
Depository Fund: held in an authorized depository bank, remaining under the recipient agency's control.
Special Account in the General Fund (SAGF): is used to fund priority government actions, and is sourced from specified fees, grants, and donations.
Special Purpose Funds (SPFs): are funds allocated by the President for special programs and projects; not under the accountability of a particular government agency.

Relevant Provisions of Law

Money collected for a special purpose is considered a special fund, used solely for that purpose.
If the purpose of a special fund is fulfilled or abandoned, any remaining balance is transferred to the general funds of the government.

Exchange Transactions

Revenue from exchange transactions arises from selling goods or providing services to third parties (including government entities).
Examples of revenue from exchange transactions include fees, licensing fees, school fees and sales revenue.
Revenue from the use by another entity of assets. (interest, royalties, and dividends)

Recognition of Revenue

Sale of Goods: Revenue is recognized when significant risks and rewards of ownership transfer to the buyer, the entity does not retain continued managerial involvement or effective control, it is probable that economic benefits will flow to the entity, and revenue and costs are measurable reliably.
Rendering of Services: Revenue is recognized on a straight-line basis over the period the services are rendered. It can be recognized by reference to the stage of completion, if the outcome can be reliably measured.

Non-Exchange Transactions

Revenue from non-exchange transactions includes taxes, fines, penalties, gifts, donations, and goods in kind (received without providing equal value).
Revenue is usually recorded on a cash basis.

Fines and Penalties

Fines and penalties are recognized as income when collected.
Recognition criteria for assets applies.

Gifts, Donations, and Goods in Kind

Recognized as revenue when future economic benefits are probable and when conditions are met.
No conditions = immediate recognition
With conditions = recognized as liability, then revenue when conditions fulfilled.

Services in Kind

Are not recognized as revenue due to inability to control service and measure at fair value.
Includes technical assistance, volunteer services and community-based works.

Assets, Liabilities, and Revenue Measurement

Assets: measured at acquisition-date fair value
Liabilities: measured at present value (when time value is considered)
Revenue: measured as increase in net assets.

Debt Forgiveness

If a lender cancels a government entity's debt, the debtor recognizes revenue equal to the carrying amount of the cancelled debt.
If a controlling entity cancels the debt of a wholly owned entity, the debt is treated as a contributor and not revenue.

Bequests

Bequests are measured at the fair value of the goods or service received.

Grant with Conditions

An asset received with conditions is initially recognized as a liability, with revenue recognized upon fulfillment of conditions.

Concessionary Loans

If a loan proceeds is below market value, the difference is recorded as revenue.
If the LGU has a current obligation, the difference is recognized as a liability that is recognized as revenue when satisfied.

Other Receipts

These include subsidies from the national or local government, or from various agencies (with specific receipts).

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Description

Test your knowledge on the different types of income and funding for local government units (LGUs). This quiz covers various aspects such as service income, transfers, and business income classifications. It also includes questions about procurement processes and document management within LGUs.